Asia's top asset service providers of the year, explained
Since its launch a decade ago, the AsianInvestor Asset Management Awards have become an industry leader, sought after by the largest asset managers with a presence in Asia Pacific.
The awards have evolved through the years. While they used to be selected solely by the editorial team, we now tap the knowledge and expertise of a judging panel comprising independent industry veterans and top executives from asset owners across the region to bring greater weight to our awards procedure.
We have also developed more specific criteria with a points system to guide entries and allow for a more structured and transparent process.
Today we reveal the rationale behind the judges' selection of winners for the top asset service providers for 2021, which we had announced in April.
The criteria for this category included how entrants created value for clients and their competitive advantages, key improvements to operations with data-proven results, and key innovations in areas such as services and technology. As with all our awards, client testimonials and case studies were given some weight in the decision process as well.
Tomorrow, we reveal the rationale for the inaugural ESG Excellence Awards. Congratulations again to all winners.
Best Auditor (funds and tax)
As you’d expect from EY, this was a comprehensive and impressive submission that judges said “scored high in almost most all categories”. However it was in the area of digitising the audit that judges saw the most value for funds.
Ask any fund, and the traditional audit process involves a massive exchange of data between the fund manager, its fund administrators and the fund’s counterparties.
Those still using manual processes risk introducing errors.
To address data-related concerns, EY has developed WAMApps, a proprietary data capture, reporting and automation platform designed specifically for hedge fund audits.
As well as harnessing the data of fund administrators’ fund accounting and transfer agency platforms, it also links external market data from vendors and performs automatic validation of client balances with external market data.
As a streamlining and automation tool, WAMapps is getting good reviews in APAC where EY began onboarding the system with administrators in 2018.
To date, EY has onboarded 16 fund administrators - including Citco, Northern Trust, State Street, MUFG, HSBC, SS&C, Morgan Stanley, BNP and Maples - auditing more than 600 funds in the region using WAMapps annually. Usage in the region has gone up by over 50% as compared with the previous year.
In addition, EY has upgraded the analytics features which provide its audit teams with visual representation of fund activities to drive the risk assessment process.
As one client said, if it’s EY, you know you’re getting a product that functions, and functions well.
“One-stop-shops often do not work or work in name only. With EY we can say with confidence that it works. We also benefit from the seamless integration between EY audit and tax,” said the client, who is the head of legal and compliance at one fund.
Best Bank for Cross-border Custody
Cross-border custody is a tough beat for any financial institution, let alone for a new kid on the block such as BNP Paribas.
But as the French asset services provider said in its submission: “It’s not about being the biggest; it’s about bringing value to the market.”
With a strong client-focused emphasis, BNP Paribas worked hard this year to shed its status in the region as merely a challenger brand to emerge as a leading and innovative alternative to the more established operators.
In 2021, it was granted a China QFI licence, allowing it to directly support all of the access schemes which generated increased interest from Europe.
It also responded quickly to regulatory changes and has helped clients to be the first to access new cross border schemes, for example Asian Region Fund Passport (Smartshares), MRF & OFC (BEA Union), VCC (CSOP) Stock Connects (Huatai).
With the adoption of ESG regulations across the region, it provided in-depth reporting and analytics solutions to help clients to respond to disclosure requirements. Its Manaos platform allows asset managers to easily assess the ESG impacts on their portfolios.
It also registered tremendous success in winning Singapore VCC mandates including Indea Capital, First Plus, CSOP and Kamet.
VCC is a new legal entity structure for all types of investment funds in Singapore. It can be formed as a single standalone fund, or as an umbrella fund with two or more sub-funds, each holding different assets.
Many mandates were won in India with its integrated banking proposition, including Canadian AIMCo.
Its concentration on the APAC region overall paid dividends: APAC growth helped BNP Paribas to overtake Citi to become No.4 largest custodian globally by revenue.
In all categories, judges felt that BNP Paribas made a strong and highly deserving submission.
“The submission was clearly presented with a focus on cross-border custody based on the criteria,” judges commented. “Very balanced on all fronts.”
Best Data & Technology Provider
In terms of key innovations and market leading actions, Tradeweb in 2021 set about to relieve some of the most nagging and persistent pain points. If the testimonials are anything to go by, it more than achieved that aim.
Libor transition – always a financial institution bugbear – Tradeweb eased the shift to new rates by introducing a function that allows traders to upload a spreadsheet to automatically switch old Libor position to new risk-free rates.
Working across all currencies, it is an easy way for traders to move their existing positions and for the dealer to price.
In terms of automated trading, there was a marked uptake in the adoption of AiEX and its AI-based solution allowed traders to capitalize on strategic trading opportunities and increase reactivity to market conditions with greater speed of execution.
This was particularly relevant for the Asian market where the inclusion of Chinese bonds into global indices generates many trades that can be handled automatically.
Portfolio trading, meanwhile, is a solution that allows traders to package multiple bonds into a single basket of buys and sells, negotiate a portfolio level price, and execute the trade in a single transaction.
Testimonials were strong.
“We used to take a long time to get benchmarks for our trades, but with Tradeweb Trade Cost Analysis, we can get analytics in real time,” one client said of Tradeweb. “We have achieved significant cost savings and improved execution performance, as traders can now focus on higher value-added tasks.
“In addition, end investors can be confident that we are performing well against our best execution policy and that we have rigorous processes in place.”
Overall, judges were impressed by this submission.
“Very powerful presentation of the case,” judges said. “A lot of strengths across the different categories – good use of case studies and client testimonials.”
Best Global Custodian for Asset Owners
There was strong growth in ETFs, private markets, ESG and digital assets in the Asia Pacific region in 2021 and State Street was ready with market-leading product offerings and solutions across all these areas.
Judges were impressed by the scale of innovation which addressed pressing and very specific client problems.
In terms of harmonising data, State Street Alpha Data Services is aimed at helping clients in multiple asset classes manage and interpret data at scale.
Meanwhile, new fund structures and technology advancements are making private markets more accessible to investors searching for yield.
State Street recently acquired Mercatus and launched Alpha for Private Markets, a single platform that can manage the entire lifecycle of a client’s alternative investments, front-to-back and at scale.
Its ESG offering includes risk analytics and regulatory reporting capabilities that cover the entire gamut of Task Force on Climate-related Financial Disclosures, Sustainable Finance Disclosure Regulation, along with climate-stress testing and scenario analysis.
A good example was Australia’s EISS Super, which implemented State Street’s risk analytics solution to assess the carbon emissions of its US$4.3 billion portfolio, helping it to meet its ESG investment and reporting needs across asset classes.
As far as innovation in ETF servicing was concerned, State Street was selected as the service provider for Australia’s first dual access model ETF.
For those at the more adventurous end of asset ownership, State Street did not disappoint.
In June 2021, it formed a new business division - State Street Digital - expanding its asset class coverage to include cryptocurrency, tokenization and fractional ownership and servicing client needs for digital custody.
Best Index Provider, Global
S&P Dow Jones Indices
Dow Jones has always been a byword for excellence and 2021 saw it retain its position as the go-to index with great innovations that brought measurability to whole new categories.
One such example was its new offering on China.
As China continues its transformation toward new economy sectors, technology plays an increasingly important role in the nation's economic and equity market composition.
The S&P China Tech 50 Index launched in 2021 is based on a transparent, well-established industry classification system (GICS®), and spans multiple industries to capture the tech segment.
Dow Jones also has evolving asset classes covered, building crypto indices as digital assets continue to gather broad appeal.
It launched the S&P Cryptocurrency Index Series in May 2021 to provide market participants with new tools to measure and assess the emerging asset class.
S&P DJI says it aims to continue to enhance this index series to keep pace with the innovations and provide additional accessibility to market participants.
Perhaps its most innovative development of the year was its S&P 500 Twitter Sentiment Index which aims to be the global measure for social media sentiment driving investments.
Using the S&P 500 Index as its eligibility universe and a sentiment scoring model measuring bullish and bearish Tweets containing Twitter "$cashtags," the indices measure the performance of constituents with high sentiment scores.
“Social media is impacting the way information is being conveyed to investors and the combination of S&P DJI's 125 years of indexing experience with Twitter's large, growing social media community data set will provide a compelling barometer for investors looking to capture market sentiment,” S&P Dow Jones said in its submission.
Best Law Firm for Asset Management
With a focus on institutional and strategic investors, Mayer Brown’s Funds Practice has built a world-class, globally integrated and multidisciplinary practice advising some of the region’s largest and most active investors.
The list of clients is impressive and includes sovereign wealth funds, funds of funds, university endowments, public pension plans, impact investors and charitable organizations.
The firm has expertise in a host of asset strategies, including private equity funds, hedge funds, real estate and infrastructure funds, venture capital funds, mezzanine funds, distressed debt funds, renewable and traditional energy funds, funds of funds and hybrid funds.
However, it is its Asia funds practice that focused the attention of judges and the way that it leveraged its global experience to advise on both hedge and private equity fund formation particularly in Hong Kong where it is perfectly placed to identify developing trends.
One emerging trend is hedge fund managers building in typical private equity features into their funds and private equity managers offering more liquid products to their clients.
Its ability to combine fund formation and regulatory expertise in one team was also a key feature of this submission, providing clients with a compelling competitive advantage.
The firm regularly advises both local and international clients on a diverse range of issuing such as fund distribution in Hong Kong, suitability requirements and compliance with KYC/AML rules.
As with any leading law firm, Mayer Brown placed a strong emphasis in its submission on an active regulatory practice, believing that compliance is the bedrock when launching new funds.